Contingent vs. Pending: What This Means in Real Estate

As you drive by “for sale” signs during your search for your next home, you may spot one that says “contingent” or “pending.” These are sort of limbo states for homes that happen when the seller has accepted an offer but the transaction is not yet finished. In these cases, the home could become available again should something go wrong before the sale is finalized.

After all, the process of buying and selling a home doesn’t happen overnight. When you factor in tasks like securing financing, getting a home appraisal and conducting the title search, it can take weeks for a buyer’s needs — called “contingencies” — to be met. After these contingencies are settled, the sale is considered pending until it’s officially completed.

Contingencies protect the buyer

Contingencies are conditions that the buyer needs to be met before they can finalize the transaction on their end, and either party can still back away from the table. When a sale is contingent, it also may be labeled “under contract,” as the seller has accepted the buyer’s offer but the deal hasn’t been finalized. These contingencies can include requests such as:

  • An inspection contingency, which allows the buyer to back out if something problematic is uncovered during the home inspection. It can also stipulate that the seller has to cover the costs of repairs that are recommended as a result of the inspection.

  • An appraisal contingency. Once an appraiser determines the fair value of the home, the buyer can choose to walk away if they’re overpaying or if the lender won’t finance it.

  • A financing contingency, which means that the home can go back on the market if the buyer isn’t approved for a large enough mortgage.

  • A home sale contingency, which means that the sale is conditional on the buyer selling their current home.

  • A title contingency. If any liens or judgments are discovered during the title search, the owner has to address them before the sale proceeds.

In a strong seller’s market, where available homes are scarce, it can be difficult for buyers to get sellers to agree to contingencies. For example, if other buyers will agree to cover the cost of any problems uncovered by the home inspection, the seller has little incentive to agree to an offer that’s attached to an inspection contingency.

Sellers are bound once the sale is pending

Once all contingencies are settled (or if there are no contingencies in the first place), the home sale is pending. The seller can’t back out of the sale, unless the buyer fails to meet a contractual obligation (such as if their deposit fails to clear). However, they could still receive other offers so that they have a backup plan in case the deal falls through.

The buyer, meanwhile, can still change their mind until the moment the deal is officially closed. So if your dream home is labeled as pending, don’t give up hope just yet — it could still become available again for a myriad of reasons. You can reach out to the seller with your own offer so they’ve got your information ready in case the current buyer backs out.

How often do these homes go back on the market?

According to the National Association of Realtors’ May 2022 confidence index survey, contracts typically close within 30 days. From March 2022 to May 2022, 7% of contracts were terminated, while 21% of contracts didn’t close as planned because of appraisal issues.

While the majority of deals don’t fall through, that makes it all the more urgent for you to make your interest known to the seller if you fall in love with a home that’s under contract. It also underscores the importance of having your financial ducks in a row before you start shopping: Get preapproved for a mortgage, know what you are and aren’t willing to sacrifice, and have a realistic picture of what you can afford to invest in a home in terms of repairs. This way, if the home does become available, you’ll be an ideal backup option for the seller.

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